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Tuesday, 30 December 14
INDIA INC TO BENEFIT AS IMPORTED COAL PRICES SET TO FALL - RAHUL PRITHIANI
The Hindu: India‘s coal import volumes are set to rise by over 30 per cent over the next two years to 214 million tonnes in 2015-16, as domestic supply falls short of surging demand.
However, globally, the situation is just the reverse. Severe oversupply with few takers will drag down prices of both thermal and coking coal by about 25 per cent. This will slash fuel costs and support the profitability of India Inc. Lower prices will also cap India’s coal import bill, unlike a 17 per cent annual growth witnessed over the last five years.
Supply soars
Miners in major coal exporting countries like Indonesia and Australia have significantly ramped up investments over the past five years, anticipating steady off take from major importers such as India and China. For example, coal mining investments in Australia are estimated to have doubled to about $50 billion over 2009 to 2013 from about $25 billion over 2003 to 2008. Moreover, domestic coal supply in China is also likely to increase as its railway capacity for hauling coal expands by nearly one-third to three billion tonne by 2020. This will ease transportation bottlenecks in that country.
Thus, while coal supplies will grow, there are likely to be few takers.
Even as miners stack up supplies, off take by major consumers including China, the U.S. and Europe is set to post a muted rise. Weak GDP growth, a gradual shift to cleaner fuels and rising energy efficiencies will curb demand.
The most telling fact is that China, the world’s largest importer of coal, has placed import curbs, will further restrict demand. Over the last three months, it has banned imports of low-grade coal, while imposing import duties on both thermal (six per cent) and coking coal (three per cent). Global economic weakness and China’s measures to move away from an investment-led growth model will also halve the growth in coking coal importsover the next five years.
Thus, oversupply in the global coal market, along with weakening currencies in exporting countries, is expected to drag down thermal and coking coal prices by 25 per cent approximately over the next two years to $65 per tonne and $115 per tonne by 2015, respectively.
Advantage India
For India, which has scarce domestic energy resources, the above changing dynamics certainly bode well. India’s coal import volumes are expected to rise by 33 per cent over the next two years, as domestic production lags demand. In such a scenario, falling global coal prices will help India Inc.
In the power sector, projects running on imported coal — including that of Tata Power, Adani Power and Essar Power — will benefit the most from sliding coal prices. These projects have incurred huge losses since 2012-13 when Indonesian coal prices almost doubled following a change in regulations. However, with imported coal prices plummeting, returns of such projects are expected to improve. As per our analysis, for a project operating on imported coal, even a one per cent fall in fuel costs will drive up equity returns by 25 basis points.
Even power projects based on domestic coal will benefit, as they can increase blending of imported coal and boost utilisation rates. In particular, plant-load factors (PLFs) of post-2009 power projects, which languished at just 51 per cent in 2013-14, will improve gradually.
Similarly, input costs for cement and metal manufacturers will decline, supporting their profitability. For cement players, reliance on imported coal has gradually risen — reaching 30-35 per cent of total coal consumption in 2013-14, as the power sector was prioritised for domestic coal supply. As demand growth slowed and operating costs rose, the industry’s operating margins fell to 15 per cent in 2013-14 from 28 per cent in 2009-10. Therefore, falling imported coal prices, will reduce cost pressures for the sector through lower fuel costs, which will decline by 3-4 per cent in 2014-15. In particular, cement plants, which have higher reliance on coal imports, will witness a much sharper reduction in fuel costs, as imported coal prices are set to fall by 15-17 per cent in 2014-15.
The decline in global coking coal prices is good news even for steelmakers beset by muted demand and global overcapacity. With good-quality domestic supply being scarce, Indian steelmakers import nearly 70 per cent of their coking coal requirements and coal accounts for 30 per cent of their manufacturing costs. Thus, a sharp decline in global coking coal prices will drag down operating costs by 6-8 per cent in 2014-15 and thereby support profitability.
There are also some macroeconomic advantages. Most importantly, despite the rise in coal import (volumes), the value (or the import bill) will only rise marginally at a CAGR of one per cent over the next two years. This contrasts sharply vis-à-vis the past 5 years, when the bill had risen at a 17 per cent CAGR to Rs.888 billion (approximately US$ 13,950,428,156).
The author is Director, CRISIL.
Source: The Hindu
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Tuesday, 23 December 14
SHIPOWNERS ARE FINALIZING MORE DEALS AS YEAR END COMES CLOSER - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS WORLDWIDE
With the 2014 year just a few days before waving goodbye, shipowners are looking to close their pending deals in both the newbuilding and S&P m ...
Monday, 22 December 14
Q2'15 CFR SOUTH CHINA COAL SWAP CLOSED $ 0.30 LOWER THAN Q1'15 CLOSING
COALspot.com: API 8 CFR South China Coal swap for Q1’ 2015 delivery has decreased by US$ 3.67 (-5.81%) month over month and US$ 0.35 (-0.58%) ...
Monday, 22 December 14
API 5 FOB NEWCASTLE COAL SWAPS ARE HEADING SOUTH
COALspot.com: API 5 FOB Newcastle Coal swap for Q1’ 2015 delivery lost US$ 1.71 per MT (-3.24%) and closed at US$ 51.02 on 19 December month ...
Sunday, 21 December 14
PANAMAX COAL FREIGHT FROM INDONESIA TO INDIA FALLS FURTHER
COALspot.com: The BDI continued its fall as cape index lost heavily week on week.
The BDI was down 6.95 percent week over week and closed at 8 ...
Friday, 19 December 14
HOW WILL LOWER BUNKER PRICES AFFECT THE SUBSTANTIAL OVERCAPACITY IN DRY BULK MARKET? - BIMCO
As bunker fuel costs have come down from USD 600 per tonnes to USD 330 per tonnes in the past 6 months, much talk about increased ship speed have s ...
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- Videocon Industries ltd - India
- Edison Trading Spa - Italy
- Cigading International Bulk Terminal - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Aboitiz Power Corporation - Philippines
- Lanco Infratech Ltd - India
- Maheswari Brothers Coal Limited - India
- Central Java Power - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Bukit Baiduri Energy - Indonesia
- Commonwealth Bank - Australia
- Africa Commodities Group - South Africa
- VISA Power Limited - India
- Bhoruka Overseas - Indonesia
- London Commodity Brokers - England
- Bangladesh Power Developement Board
- Metalloyd Limited - United Kingdom
- GAC Shipping (India) Pvt Ltd
- Trasteel International SA, Italy
- Port Waratah Coal Services - Australia
- Indian Energy Exchange, India
- Power Finance Corporation Ltd., India
- CNBM International Corporation - China
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Barasentosa Lestari - Indonesia
- Electricity Authority, New Zealand
- Singapore Mercantile Exchange
- Baramulti Group, Indonesia
- Economic Council, Georgia
- New Zealand Coal & Carbon
- Semirara Mining Corp, Philippines
- Wood Mackenzie - Singapore
- Global Green Power PLC Corporation, Philippines
- Ambuja Cements Ltd - India
- South Luzon Thermal Energy Corporation
- Thai Mozambique Logistica
- Indonesian Coal Mining Association
- SMG Consultants - Indonesia
- Vizag Seaport Private Limited - India
- Tamil Nadu electricity Board
- Standard Chartered Bank - UAE
- The State Trading Corporation of India Ltd
- Pendopo Energi Batubara - Indonesia
- Madhucon Powers Ltd - India
- Coal and Oil Company - UAE
- ASAPP Information Group - India
- Bukit Asam (Persero) Tbk - Indonesia
- Gujarat Sidhee Cement - India
- Jindal Steel & Power Ltd - India
- Price Waterhouse Coopers - Russia
- Latin American Coal - Colombia
- Miang Besar Coal Terminal - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Goldman Sachs - Singapore
- TNB Fuel Sdn Bhd - Malaysia
- Deloitte Consulting - India
- Altura Mining Limited, Indonesia
- Tata Chemicals Ltd - India
- SMC Global Power, Philippines
- Indian Oil Corporation Limited
- Energy Development Corp, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Grasim Industreis Ltd - India
- Orica Australia Pty. Ltd.
- Sinarmas Energy and Mining - Indonesia
- Anglo American - United Kingdom
- Directorate Of Revenue Intelligence - India
- Indika Energy - Indonesia
- Wilmar Investment Holdings
- Kumho Petrochemical, South Korea
- Directorate General of MIneral and Coal - Indonesia
- Global Business Power Corporation, Philippines
- Borneo Indobara - Indonesia
- Heidelberg Cement - Germany
- Offshore Bulk Terminal Pte Ltd, Singapore
- Rashtriya Ispat Nigam Limited - India
- Bukit Makmur.PT - Indonesia
- Mercuria Energy - Indonesia
- Bhushan Steel Limited - India
- Simpson Spence & Young - Indonesia
- Indogreen Group - Indonesia
- Toyota Tsusho Corporation, Japan
- Billiton Holdings Pty Ltd - Australia
- PNOC Exploration Corporation - Philippines
- Siam City Cement PLC, Thailand
- Sarangani Energy Corporation, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Kaltim Prima Coal - Indonesia
- GMR Energy Limited - India
- Petron Corporation, Philippines
- Parry Sugars Refinery, India
- Marubeni Corporation - India
- OPG Power Generation Pvt Ltd - India
- GVK Power & Infra Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Central Electricity Authority - India
- Asmin Koalindo Tuhup - Indonesia
- Rio Tinto Coal - Australia
- Mercator Lines Limited - India
- Kideco Jaya Agung - Indonesia
- Essar Steel Hazira Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Kartika Selabumi Mining - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Merrill Lynch Commodities Europe
- Therma Luzon, Inc, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Gujarat Electricity Regulatory Commission - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Holcim Trading Pte Ltd - Singapore
- Krishnapatnam Port Company Ltd. - India
- Aditya Birla Group - India
- Xindia Steels Limited - India
- Parliament of New Zealand
- Bahari Cakrawala Sebuku - Indonesia
- Larsen & Toubro Limited - India
- Timah Investasi Mineral - Indoneisa
- CIMB Investment Bank - Malaysia
- Sical Logistics Limited - India
- White Energy Company Limited
- European Bulk Services B.V. - Netherlands
- Sakthi Sugars Limited - India
- Australian Commodity Traders Exchange
- Gujarat Mineral Development Corp Ltd - India
- Bulk Trading Sa - Switzerland
- Leighton Contractors Pty Ltd - Australia
- The University of Queensland
- Dalmia Cement Bharat India
- Bhatia International Limited - India
- Mjunction Services Limited - India
- Antam Resourcindo - Indonesia
- The Treasury - Australian Government
- Cement Manufacturers Association - India
- Bayan Resources Tbk. - Indonesia
- Formosa Plastics Group - Taiwan
- LBH Netherlands Bv - Netherlands
- International Coal Ventures Pvt Ltd - India
- Agrawal Coal Company - India
- Uttam Galva Steels Limited - India
- SN Aboitiz Power Inc, Philippines
- Minerals Council of Australia
- Bharathi Cement Corporation - India
- Romanian Commodities Exchange
- Kepco SPC Power Corporation, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Orica Mining Services - Indonesia
- Star Paper Mills Limited - India
- TeaM Sual Corporation - Philippines
- Eastern Energy - Thailand
- Manunggal Multi Energi - Indonesia
- Sojitz Corporation - Japan
- San Jose City I Power Corp, Philippines
- Ministry of Transport, Egypt
- India Bulls Power Limited - India
- Meenaskhi Energy Private Limited - India
- Alfred C Toepfer International GmbH - Germany
- Mintek Dendrill Indonesia
- Sindya Power Generating Company Private Ltd
- Chamber of Mines of South Africa
- Makarim & Taira - Indonesia
- Attock Cement Pakistan Limited
- Intertek Mineral Services - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Coastal Gujarat Power Limited - India
- Interocean Group of Companies - India
- Riau Bara Harum - Indonesia
- Global Coal Blending Company Limited - Australia
- Karbindo Abesyapradhi - Indoneisa
- MS Steel International - UAE
- Siam City Cement - Thailand
- Kapuas Tunggal Persada - Indonesia
- PTC India Limited - India
- Planning Commission, India
- Thiess Contractors Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Chettinad Cement Corporation Ltd - India
- Renaissance Capital - South Africa
- Malabar Cements Ltd - India
- Eastern Coal Council - USA
- Karaikal Port Pvt Ltd - India
- Carbofer General Trading SA - India
- ICICI Bank Limited - India
- Kobexindo Tractors - Indoneisa
- Savvy Resources Ltd - HongKong
- Coalindo Energy - Indonesia
- Sree Jayajothi Cements Limited - India
- Salva Resources Pvt Ltd - India
- IEA Clean Coal Centre - UK
- Meralco Power Generation, Philippines
- Ministry of Mines - Canada
- Vijayanagar Sugar Pvt Ltd - India
- Iligan Light & Power Inc, Philippines
- Posco Energy - South Korea
- Binh Thuan Hamico - Vietnam
- Ind-Barath Power Infra Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Jaiprakash Power Ventures ltd
- Indo Tambangraya Megah - Indonesia
- Globalindo Alam Lestari - Indonesia
- Straits Asia Resources Limited - Singapore
- IHS Mccloskey Coal Group - USA
- AsiaOL BioFuels Corp., Philippines
- Independent Power Producers Association of India
- Electricity Generating Authority of Thailand
- Kohat Cement Company Ltd. - Pakistan
- Banpu Public Company Limited - Thailand
- Oldendorff Carriers - Singapore
- Energy Link Ltd, New Zealand
- GN Power Mariveles Coal Plant, Philippines
- Medco Energi Mining Internasional
- Georgia Ports Authority, United States
- McConnell Dowell - Australia
- Ministry of Finance - Indonesia
- Australian Coal Association
- Samtan Co., Ltd - South Korea
- PowerSource Philippines DevCo
- Vedanta Resources Plc - India
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